Dispatch from Germany | September '25

Stories to watch in the weeks ahead

• Climate Action Programme – Tackling transport: The government’s new Climate Action Programme is beginning to take shape after all involved ministries have submitted their measures to the environment ministry before a deadline in the last week of September. The ministry said it would now begin to review the individual proposals before drafting a coherent document that will be debated in the coalition government’s cabinet. Environment minister Carsten Schneider promised to publish the full programme before the end of this year. Germany is legally obliged to present a programme of measures in all sectors to put the country on track for its national 2030 and 2040 emissions reduction targets, which the country is set to miss if current policies persist. Several NGOs called on the government to tackle stubbornly high transport emissions. While EV sales in Germany continue to pick up, setbacks in developing a more comprehensive and attractive public transport system as an alternative to private cars continue to plague the sector’s wider transformation.

• Gas reserve auctions – No plans, no plants: The quest to build new gas-fired power plants as a backup for an energy system increasingly reliant on renewables could face yet more delays, legal and energy industry experts warn. Plant and grid operators have been eagerly awaiting the auctions, which they consider a prerequisite for keeping Germany’s coal exit on schedule. The new government plans to double the new capacity to 20 gigawatts, and to relax requirements for the plants’ hydrogen-readiness. However, this makes sticking to the planned auction date of late 2025 increasingly unlikely, warned Anna von Bremen, head of energy innovation at law firm Osborne Clarke, who pointed to outstanding permissions from the European Commission. The auctions may not even take place before late 2026, von Bremen said. Grid operator Amprion's CEO Christoph Müller said it would be difficult to find sufficient hardware and personnel to build the plants. So far, however, the government’s 2025 timetable has remained unchanged.

• Merz’s industrial promise – Summits but no solutions (yet): Recent economic data signalling weak activity have not been kind to self-styled industrial guardian Friedrich Merz. Despite the chancellor’s hopes to revive growth, which has been sluggish since the energy crisis of 2022, business confidence in the country remains low. At industry summits for the steel and car industry scheduled for the coming weeks, Merz hopes to brighten the mood, which is partly clouded by high energy prices eroding international competitiveness. In a joint analysis released in late September, Germany’s leading economic research institutes said hopes for improved growth in 2026 mostly stemmed from Germany’s debt-financed spending spree, which they warned must not obscure the unchanged need for deeper reforms. 'Industry power price' subsidies are meant to offer relief to energy-intensive companies, even if leading research institutes warn the subsidy for individual consumers is not the right way forward. The European Commission approved the state aid scheme at the end of June but the government's further timetable on the matter is unclear. 

• Carbon management – No place for ‘nimbyism’: Merz’s government is also pursuing carbon capture and storage (CCS) and carbon capture and use (CCU) to speed up the energy transition. After the coalition presented a first law proposal on permitting carbon storage and transport in August, parliament must now debate the draft before it decides to which extent the technology will be used to mitigate CO2 output in the country. Frank Wetzel, state secretary for the economy ministry, suggested that opting out of carbon management solutions would no longer be an option for Germany. “Not in my backyard” (nimbyism) cannot be the right policy,” Wetzel said at a conference in Berlin in late September. CCS/CCU could also become part of the next round of the government’s “climate contract” industry transition support scheme. The economy ministry promised another round “soon,” but researchers and opposition politicians say the delay is already hurting companies looking to ramp up decarbonisation efforts.

The latest from Germany – last month in recap

• Monitoring report – ‘Reality’ is what you make of it: A highly anticipated special monitoring report on the speed, effectiveness, and costs of Germany’s energy transition was finally released in mid-September. The report was commissioned by economy minister Katherina Reiche, who dubbed it a “reality check” for the power system. The report found that Germany’s electricity demand will show “robust” growth in the coming years, with exact volumes depending on policy choices and economic growth. The authors concluded much more renewable power, grid, storage, and hydrogen capacity will be needed for a clean, secure, and affordable energy system. The renewable power industry said the report underlined that there was no need to fundamentally change the energy transition’s course. But Reiche's ministry concluded it would cut subsidies for renewables “to the absolutely necessary level,” lower sustainability requirements for hydrogen, and reduce targets for the rollout of offshore wind power, to reduce costs. But the German Engineering Federation (VDMA) said that “neither the report nor the measures proposed by the ministry provide a clear concept for the future.”

• Special fund and budget – Mind the gap: Agreeing the 500-billion-euro special fund for infrastructure and climate neutrality and reforming Germany’s constitutional ‘debt brake’ rules marked a major success for the government at the onset of coalition talks. Six months on, parliament passed the corresponding law. But the Green Party, who had supported the reform, was critical of the implementation. “This is not what we agreed to,” said Green Party leader Felix Banaszak. He argued Merz and finance minister Lars Klingbeil had not ensured that the fund was used exclusively for new investments beyond the core government budget, and accused them of abusing the record debt package for pet projects. This view was echoed by several economic research institutes and the government’s financial watchdog, the Court of Auditors, who said the entire package lacked credible control mechanisms and clear targets.

• Ten years after ‘Dieselgate’ – Carmakers still shun full EV embrace: In September 2015, the ‘Dieselgate’ emissions fraud scandal erupted and shook Germany's flagship industry to its core. Or maybe not? Ten years later, the likes of VW, BMW and Mercedes still wobble between targeting short-term profits and pursuing a long-term strategy, according to Peter Mock from the International Council on Clean Transportation (ICCT), which played a key role in breaking the scandal. Germany’s carmakers are undermining their own EV sales by continuing to lobby against the EU’s 2035 combustion engine phaseout, Mock told Clean Energy Wire in an interview. Meanwhile, the carmakers themselves spent Dieselgate’s 10th birthday at the IAA mobility show in Munich and presented new electric models that could be crucial to halt their decline on global markets. Environmental groups, however, voiced doubts about a true turnaround in the automotive sector’s attitude.

• German railway reform – Punctuality goals delayed: Long gone are the days when Germany’s railway company Deutsche Bahn was considered a byword for German punctuality and reliability. Both have deteriorated immensely in recent years, leading the Court of Auditors to conclude in July that Deutsche Bahn lacks a credible strategy to escape “permanent crisis” despite “ever-increasing financial resources.” Transport minister Patrick Schnieder sought to counter this verdict with a grand “reset” of the ailing railroad system, which plays an important role in the country’s plans to decarbonise transport. In his new strategy for Deutsche Bahn, the conservative lawmaker plans to invest around 100 billion euros in railway modernisations by 2029 and promised a modernisation of all major routes by 2036. However, Schnieder at the same time poured cold water on hopes for rapid improvements. He dismissed the current goal of achieving 70 percent punctuality by 2026 as “not even remotely achievable,” saying the railway would take until 2029 to reach the threshold.

Benjamin’s picks – Highlights from upcoming events and top reads

• Nuclear fusion – An unlikely frontrunner: When thinking of countries that could take nuclear energy generation to the next level, Germany might not immediately spring to mind. Yet, the country of the ‘nuclear exit’ is home to several energy startups that aim to do just that. But instead of splitting atoms, they want to fuse them. While Germany has been known for years as a solid research location for nuclear fusion, three startups say the country faces a “now or never” moment to turn research prowess into commercial success – demanding the small fee of three billion euros to make it work.

• Car speed record broken in Germany – By a Chinese car: A new speed record was registered at the ATP vehicle test circuit in northern Germany. But the vehicle almost breaching the barrier of 500 kilometres per hour was neither developed in Germany, nor did it feature a combustion engine. At 496.22 km/h, the new top speed for cars ready for mass production was achieved by Chinese battery car maker BYD - yet another wake-up call for petrol heads still betting on combustion engines.